By Anushree Mukherjee
July 6 (Reuters) – Oil prices fell on Monday after OPEC+ agreed to further increase its output targets from August while exports from key producers via the Strait of Hormuz are recovering, potentially adding to global supplies.
Brent crude futures fell 47 cents, or 0.65%, to $71.65 a barrel at 1227 GMT after settling 0.45% higher on Friday. U.S. West Texas Intermediate crude was at $68.19 a barrel, down 50 cents, or 0.73%. There was no settlement for WTI on Friday as U.S. markets were closed ahead of the Independence Day holiday on Saturday.
Both contracts were little changed last week after mostly falling over the past few weeks, as investors kept a close eye on talks between the U.S. and Iran over the fate of shipping through the Strait of Hormuz while keeping tabs on the recovery in Gulf oil exports.
“The downward move is still influenced by earlier stranded tankers managing to exit the Gulf, resulting in an increase in oil on water,” UBS analyst Giovanni Staunovo said.
The Organization of the Petroleum Exporting Countries and their allies including Russia agreed on Sunday to further increase output targets by 188,000 barrels per day from August, on top of similar increases for June and July.
However, the increase has remained largely on paper because of the U.S.-Israeli war on Iran, which closed the strait to tanker traffic for key OPEC producers, including Saudi Arabia, Kuwait and Iraq, capping their output.
“They are selling into a falling market, offering little hope of an imminent price recovery,” said PVM analyst Tamas Varga. “However, lower oil prices will undoubtedly stimulate demand further down the line.”
The United Arab Emirates raised its crude output to near record highs above 3.8 million barrels per day in June after it quit OPEC to escape production caps, two sources familiar with production data said on Monday.
Meanwhile, Saudi Arabia has set the August Arab Light crude oil official selling price to Asia at $1.50 a barrel below the Oman/Dubai average, down from the previous month, a pricing document reviewed by Reuters showed.
Meanwhile, ANZ Bank in a note said, “We now expect global oil demand to contract by 1.5 million barrels per day in 2026, reflecting a sharper-than-expected downturn in Q2, when year-on-year declines could reach 4 million bpd based on preliminary data.”
“However, we expect demand losses to moderate in the second half of the year as supply improves and some deferred consumption returns,” the bank added.
Elsewhere, Ukraine’s military said on Monday it struck oil refineries in Russia’s Yaroslavl and Leningrad regions overnight.
(Reporting by Florence Tan and Helen Clark; Anushree Mukherjee in Bengaluru; Editing by Thomas Derpinghaus, Joe Bavier, Emelia Sithole-Matarise and Louise Heavens)